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Negotiation Exercise

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the person running this exercise:

Pick the same HR rep and Hiring Manager for all exercises. They should be other FTS employees, not apprentices. Each apprentice will get to negotiate with the pair as a fresh game (the previous games don’t affect the following games). These two people can strategize before starting. They will also have info that their counterpart doesn’t have, and they can choose to share this if they wish. Send apprentices the background research, and send each party their info as outlined below. But do not send them this doc, and do not let them see the info that belongs to other parties.

Background research

Challenge outline

There will be 3 parties in this game: the potential employee, the hiring manager, and the HR rep. Each party has different incentives. Some are known to the other parties, others are kept personal because the individual may believe that keeping the info to themselves gives them an advantage. These facts are structured at the beginning but can be revealed to other parties if the individual believes it will create a better result.

Rules

  • You have 30 minutes to reach an agreement between all 3 parties.

  • The potential employee can only talk to the hiring manager. The hiring manager can talk to both HR and the potential employee. HR and the potential employee can not talk to each other.

  • You are allowed to lie, if you’re ok with the consequences of being caught lying.

  • HR and the hiring manager may strategize prior to the negotiation starting.

  • After HR and the hiring manager have talked, the next conversation should be between the employee and the hiring manager. After that, let the situation unfold naturally, with no set order.

Potential Employee

  • At an absolute minimum, you can afford to take a salary of $60k. You may not accept less than this for any reason.

  • You currently make $65k. You’re very good at your job.

  • The average for the position, at your level of experience, is $70k in the local market.

  • It’s not unheard of for this position to be offered $90k. But it’s rare.

  • You have an alternative offer in hand for $85k. But it’s at a company you’re not excited to work for. You’d much rather take this job, if they can pay competitively.

Hiring Manager

  • You have a team of four already, this new hire would be the fifth member of your team.

  • The pay range for the members of your current team ranges from $65k to $95k.

  • HR has told you that the max cash offer available for the position is $70k. They’ve made more available in the past though, for other candidates with similar experience and ability.

  • You’ve interviewed another candidate. They’re not great, but they’re willing to take $65k to start.

  • Additional benefits can be offered without affecting your cash offer.

  • This person is by far the best candidate you’ve interviewed.

HR

  • The team has four members already, this new hire would be the fifth. The total team budget for the year is $450k. The existing team members add up to $330k total. This makes the max cash available for the position $120k.

  • You get a 25% bonus on the amount under budget this team comes in for the year. The hiring manager does not know this. You told the hiring manager that the max cash available is $70k.

Things to determine

  • What is the pie? You should both be cooperating to mutual benefit, to maximize payoff for both parties, instead of looking at it as a win-lose game.

  • What is your best alternative if negotiations fail?

  • What is your zone of agreement? Within what range can you afford to take an offer, is the offer in that range, and is it better than your best alternative?

Things to remember

  • You are trying to reach an agreement that is beneficial to all parties.

  • But you’re also trying to maximize what you can get from the other parties.

  • No deal whatsoever is a bad outcome for all parties, but a bad deal might be worse than no deal for you, depending on your best alternative. If you don’t agree to a deal, it will be bad for the other parties.

  • Ultimatums rarely go well for anyone. You don’t want to work for someone who gives ultimatums, and they don’t want to hire someone who gives ultimatums.

After the exercise

  • Apprentices should meet with each other and the AUX lead to discuss their results and how they got there. This should be about 30 minutes.

  • Immediately after the first 30 minutes the people who played HR and the hiring manager should be brought in to join the discussion, for another 30 minutes.